Thailand’s gemstone exports are facing new challenges following the United States’ decision to raise import tariffs. The tariff increase could shift competitive advantages to countries like Vietnam and Sri Lanka.
Starting April 9, 2024, the U.S. will impose a 10% tariff hike on gemstones and jewelry imports from all countries. This increase will last until July 9, 2025. After that, the final tariff rate will be decided based on negotiations within the following 90 days.
The U.S. is one of the largest markets for gemstones and jewelry in the world. It is also an important export destination for Thailand and many other countries.
According to the Gem and Jewelry Information Center and data from the Global Trade Atlas, the U.S. imported $73.17 billion worth of gemstones and jewelry (excluding gold) in 2024. The top suppliers were Switzerland (17.72%), India (15.82%), South Africa (10.75%), Canada (7.57%), and Israel (5.89%). Thailand ranked 12th with a 2.49% market share, just ahead of China at 13th with 2.37%.
Impact of the Tariff Increase
In the short term, Thailand and its competitors will face a 10% tariff hike. However, China and Hong Kong will see a larger increase of 30%. This gives Thailand a relative advantage over these two countries.
Still, Hong Kong serves as a key hub for distributing Thai goods to the U.S. If tariffs on Hong Kong increase, this could indirectly hurt Thai exports sent through Hong Kong because prices will rise.
Exports shipped directly from Thailand to the U.S. may feel little immediate effect. But the 10% price rise could reduce demand among price-sensitive American consumers. Smaller importers might also cut back on Thai goods.
Looking ahead, if Vietnam and Sri Lanka manage to negotiate lower tariffs than Thailand after July, Thailand could lose its competitive edge. Large jewelry companies might move production to these countries to benefit from lower costs.
Vietnam and Sri Lanka have growing labor forces and offer incentives for foreign investment. These factors may attract multinational companies to relocate production or use these countries as export bases to the U.S.
U.S. jewelry manufacturers will face higher costs too. While raw materials like gold and platinum remain tariff-free, tariffs on diamonds and colored gemstones are high. This will increase production expenses.
As a result, U.S. producers might use fewer natural gemstones or switch to lab-grown alternatives. This shift could hurt Thailand, which exports many colored gemstones to the U.S.
Imported finished jewelry also faces steep customs duties. This makes foreign jewelry more expensive for American buyers. U.S.-made jewelry may gain an advantage, and retailers might favor domestic silver and gold products, further reducing imports from Thailand and other countries with high tariffs.
Economic Factors and Strategic Responses
Higher U.S. tariffs come at a time when inflation remains high and the economy is slowing. American consumers are more cautious, especially about luxury items like jewelry.
Thai exporters are urged to adapt quickly. They should consider lowering production costs by adopting more efficient technology. Expanding exports to new markets is also important.
Diversifying markets will help Thai exporters reduce risks and maintain long-term competitiveness despite the tariff challenges.
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